The US’ Securities and Exchange Commission (SEC) has reported a settlement with Deutsche Bank Securities following a penalty of $9.5 million after failing to properly safeguard material nonpublic information generated by its research analysts, according to a regulatory filing.
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Deutsche Bank Securities, like many other lenders routinely has access to sensitive information that is circulated for internal use. The leaking of such information in many instances is prohibited under the SEC and US law, which took shape in a research report. Consequently, the SEC issued a $9.5 million penalty against the group, which the lender agreed to pay.
Internal Leaks
Under the SEC’s order, the subject of the penalty hinged on several electronic records Deutsche Bank Securities, which involved a series of communications that took place the lender’s internal messaging system known as DB Chat. In particular, this chat had involved sensitive equity research, which the group had failed to safeguard in an accessible place.
Antonia Chion
Source: SEC
Deutsche Bank’s equity research analysts commonly communicate with clients or customers, however must do so in a structured or disciplined basis. That the communication lacked adequate policies and procedures to prevent analysts from disclosing yet-to-be-published views and analyses was what ultimately drew the fine from the SEC.
According to Antonia Chion, Associate Director of the SEC Division of Enforcement, in a recent statement on the fine, “Information generated by research analysts such as ratings, views, estimates, and trading recommendations can move markets. Broker-dealers must maintain and enforce policies and procedures that are reasonably designed in light of the nature of their business to prevent the misuse of such information.”
